Spanish Regional Policy: Economic and Social Cohesion in the European Union

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Abstract

The aim of this paper is to analyze the economic and social cohesion from the Spanish perspective. The hypothesis is that the economic and social cohesion in the European Union needs three requirements. First, the Structural Funds, European Regional Development Fund, European Social Fund and European Agricultural Guide, and Guarantee Fund, increase their weight in the community budget. Second, the resources of those funds must be concentrated on the lesser developed regions. Third, each region assigns its resources to the improvement of the factors that contribute to its backwardness (quality of human capital, innovation, development, and managerial initiative). The analysis is based on the first and second Community Support Framework [CSF 1989-93 and GSF 1994-99]. (JEL R58, O18)

Introduction

The competitive opportunities in a global environment in the twenty-first century require the existence of human and innovation capacity, associated with a professional and managerial dynamism. This will help to improve the development of local areas in the European Union (EU). Regional politics need to focus on the qualitative aspects of development--training human capital, innovation, and managerial dynamism. Appropriate infrastructures must be accompanied by measures dedicated to improve the quality of human capital, to consolidate managerial initiative, and, mainly, to generate capacity and adapt to the constant changes taking place in a global environment.

It is relevant to research how the regional politics of the EU contribute to the aim of the Single European Act which is to achieve economic and social cohesion. This analysis considers the first and second Community Support Framework (CSF 1989-93 and CSF 1994-99). First, the paper analyzes whether the Structural Funds, European Regional Development Fund (ERDF), European Social Fund (ESF), and European Agricultural Guide and Guarantee Fund (EAF) increase their weight in the community budget and if their resources have been concentrated on the objective 1 regions . The next section researches whether each region assigns its resources to the improvement of the factors that explain its backwardness.

Structural Funds: Economic and Social Cohesion

The economic and social cohesion of the EU is related to the increase of Structural Funds, given their influence on structural factors. These European funds improve the growth potential of disadvantaged regions. Hence, economic and social cohesion is dependent on the contribution of the Structural Fund to the community's budget.

Since the Single European Act arid the Structural Funds Reform in 1988, structural politics has had increased weight in the community's budget, reaching one third of the budget. The financial support received by Spain during 1989-93 reached 8.275 million euro. In the following Community Support Framework period (1994-99), this amount reached 20 million euro (Table 1). The biggest relative weight came from ERDF (more than 75 percent), followed by the EAF-Section Guide, and then the ESE. Their prevalence come from the precept in the Single European Act which states that the ERDF must be concentrated on lagging areas that are structural backward.

In absolute terms, this analysis shows how the lagging regions have received more resources. The second issue is to determine the degree to which the concentration of resources on the poor regions helps the economic and social cohesion and then appropriately correcting the absolute values. When the regional distribution of the Structural Funds in terms per head is compared with the regional GDP per head (1) (both measured to Spain index 100), the result is a reverse relationship of both variables to the Spanish lagging regions ( Table 2). As a general rule, regions with a low GDP per capita , enjoy a relative high volume of Structural Funds in both periods 1989-93 and 1994-99 GSF.

The Structural Funds in the Regions: Objective 1

Factors Determining Real Convergence

In spite of the fact that the Structural Funds resources concentrate on the lagging regions (in absolute terms and per head), policies that enable it to contribute to overcoming structural backwardness are required. …